China and coal

The People’s Republic of China is the world’s largest consumer of coal, using more coal each year than the United States, the European Union, and Japan combined. Coal power has been the dominant source of energy used to fuel the rapid economic development of China in the past two decades, with significant impact on its physical environment and human population. China relies on coal power for approximately 70-80% of its energy, with 45% used for the industrial sector and the remainder used to generate electricity.

China's coal production has more than doubled since 1990, from one billion tonnes then to 2.72 billion in 2008. (Other sources have slightly different estimates. For example, the World Coal Institute estimated China's 2008 hard coal production at 2.761 billion tonnes.) Coal production in China was estimated at almost 3.4 billion short tons in 2009. Coal power is managed by the State Power Grid Corporation.

In 2007, China’s demand for coal outpaced its supply and it became a net importer of coal for the first time. The World Coal Institute estimates that in 2008 China imported approximately 47 million tons of coal. China's 2009 net imports rose to 100 million tons, and could jump to 170 million tons or more in 2010. It was reported on March 21, 2011 that China's coal purchases had dropped to its lowest in almost two years because of higher global prices.

Coal Reserves
China's reported coal reserves are 62.2 billion tons of bituminous coal, 33.7 billion tons of sub-bituminous coal and 18.6 billion tons of lignite. Subtracting the produced quantities since 1992 (the latest data update) results in remaining reserves of about 44 billion tons of bituminous coal, 33.7 billion tons of subbituminous coal and 17.8 billion tons of lignite, or 96.5 billion tons total. That represents approximately a 40-year supply at the current rate of consumption. The majority of China’s coal reserves are located in the north and north-west regions of the country, which poses logistical difficulties in supplying coal to more populated areas and urban centers.

Some analysts estimate lower reserves than those officially reported. Using the Hubbert linearization technique that has successfully been used to predict oil reserves based on usage rates, David Rutledge of California Institute of Technology has estimated China's remaining reserves of coal at 70 billion tons, or less than 30 years at current usage rates. Zaipu Tao and Mingu Li of Northeastern University PRC School of Business and Administration place yet-to-produce reserves at 71.73 billion tons.

Coal Production
Coal production in China was estimated at almost 3.4 billion short tons in 2009. In November 2010, Chinese media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy, which the Wall Street Journal said raises issues around China and peak coal.

The top coal producing province in China, Shanxi, said it plans to reduce its production of raw coal to 650 million tonnes in 2009, a 2 percent decline from the previous year's 660 million tonnes. Shanxi's coal output saw double-digit rates of annual growth over the past few years. The Shanxi Province Coal Industry Administration also announced its decision to close 1,500 mines over the next two years.

China's raw coal output rose to 2.63 billion tons in 2008, a 12.8 percent increase over 2007. Coal profits were estimated at 130.4 billion yuan ($19.06 billion). China's National Development and Reform Commission said that although the country experienced rising demand in the first eight months of 2008, demand had shrunk since September because of the global financial crisis. The agency predicted that demand would continue to slow, and that China's output would grow at a slower pace in 2009.

In May 2011, it was reported that large power shortfalls for industrial users were expected for the summer. China's top power distributor said power deficits in areas serviced by the State Grid Corp of China (SGCC) would amount to 30 gigawatts in summer even if coal supplies are steady, water levels are normal and there are no persisting high temperatures, with the shortfalls increasing to around 40 GW if coal supplies tighten up, water stocks are less than normal and unusually high temperatures persist.

China leads the world in longwall mining
World coal production in 2009 is estimated at 5,990 million metric tons (5,348 million short tons) for hard coal and 913 million metric tons (815 million short tons) for brown or lignite coal. Worldwide, approximately half of coal production is produced via longwall mining, mainly due to the high proportion of Chinese mining performed using longwall methods. In China, underground mining accounted for 85.9% of total production in 2008. There are more than 20 underground coal mining methods in China, almost exclusively longwall. Applied to estimated 2009 production of 3,210 million short tons, the total amount of coal produced via longwall mining in China is 2,757 million short tons. In 2008, China's 268 national strategic mines operated 1,545 longwall faces and 4,808 development faces. Of these, 88.3% are mechanized.

Other countries with major amounts of longwall mining include:
 * United States: The United States operates 49 longwalls producing over 175 million metric tons (156 million short tons) per year.
 * Australia: China has 29 operating longwall faces producing 47.5 million tonnes (42.4 million short tons)

China to consolidate its coal industry
In November 2010 China announced it was going to consolidate its coal industry by forming 10 coal firms with about 100 million tonnes of annual production capacity each by 2015.

China's National Energy Administration also stated that the country would establish 10 firms that each produce some 50 million tonnes per year and raise the number of mines with capacity of 10 million tonnes each to 60 in five years.

As of November 2010, there were only two Chinese coal firms -- Shenhua Group and China National Coal Group -- that had production capacity above 100 million tonnes per year.

Exports
Chinese coal exports are controlled and a quota is distributed by the central government to a few coal groups. It is adjusted periodically depending on the domestic situation of supply and demand. As of 2010, major receiving countries and areas for steam coal exports were India, Japan, South Korea and Taiwan, while Brazil, India, Japan and the U.S. imported Chinese coke.

2010 China coal exports
In August 2010, China's General Administration of Customs announced that the country exported 1.39 million tons of coal in July, up 12% from the 1.24 million tons recorded the same month of last year. In the first seven months of 2010, China's coal exports were 11.53 million tons, 11% less than in the same period of last year. Also, during the period from January to July, China exported 1.98 million tons of coke, surging 599% from the same period in 2009.

Jiangsu pier project approved
In December 2010, Huaneng Power International, China's largest power producer, said it had obtained regulatory approval for its 2 billion yuan ($300.2 million) coal pier project in China's Jiangsu province. The project will serve as a public terminal for the transhipment, storage and distribution of coal across the waterway network of Yangtze River Delta.

Imports
China's 2009 net imports soared to 100 million tons, having been forecast at 50 million at the start of the year, despite China's domestic coal output of over 3 billion tons a year. According to Reuters, China's net coal imports could rise to 170 million tons or more in 2010, and are expected to jump 63 percent to more than 200 million tons in 2011, as domestic output struggles to keep pace with demand.

China’s demand for coal has driven global coal prices higher. At the beginning of 2007 coal prices nearly doubled as China imported more coal than it exported for the first time. In 2002, China exported 83 million tons more coal than it imported. In 2007, that number fell to 2 million and it has been predicted that China will import a net of 15 million tons in 2008. The reduction of China’s coal exports due to its internal usage is equivalent to 12% of the international market. Coal prices also spiked 34% at the end of 2007 after severe winter storms in China hindered coal delivery to power plants and led to power shortages.

In 2007, China’s demand for coal outpaced its supply and it became a net importer of coal for the first time. The World Coal Institute estimates that in 2008 China imported approximately 47 million tonnes of coal of which 43 million tonnes was steaming coal and only 4 million tonnes was coking coal.

Imports are highest for southeastern coastal areas, which are further from the coal producing areas and have greater demand due to industrialization and concentrated populations, such as Fujian, Guangdong, and Guangxi. Preliminary statistics shows for the first five months of 2010 the net import of coal into China totaled 60.11 million tons.

It was reported in May 2011 that China would likely see its import demand more than double in by 2015 with India close behind, as both increase supplies from international markets to feed rapidly growing power industries. China's thermal coal imports could rise to 200 million tonnes in 2015 from around 90 million tonnes in 2011.

Northwest ports to be used to export Powder River Basin coal to Asian markets
For more information on the proposed port developments in the western United States please visit the Coal exports from northwest United States ports article. In September 2010 Peabody Energy announced that "Coal's best days are ahead." Peabody stated that exports of coal from the Powder River Basin in Montana and Wyoming will be central to its expansion goals. The Oregonian in September 2010 reported that Northwest ports, and in particular ports in Portland, Oregon, may be used in the future to export coal to Asia. The Port of Portland said it doesn't have the space for coal exports in the short-term, but its consultants cited coal as a potential long-term market if it adds terminals on West Hayden Island.

In early November 2010 Australia-based Ambre Energy asked Cowlitz County officials in southern Washington State, which borders Oregon, to approve a port redevelopment that would allow for the export of 5 million tons of coal annually. On November 23 Cowlitz County officials approved the permit for the port redevelopment, which is to be located at the private Chinook Ventures port in Longview, Washington. Coal terminals also are proposed at two other sites along the Columbia River.

Environmentalists stated that they would oppose any such actions, arguing that coal contributes to pollution and global warming. Early discussion of how many jobs the port would produce was roughly twenty total.

In November 2010 Powder River Basin coal producer Cloud Peak Energy CEO Colin Marshall stated that a coal port on the West Coast was "absolutely more than a pipedream."

Other Powder River Basin producers, including top US coal miner Peabody Energy, have talked about the potential for a new export facility on the West Coast, with Oregon and Washington being mentioned as the top locations of choice.

Groups including the Sierra Club and Columbia Riverkeeper have vowed to stop the industry's expansion into Asia, a market currently dominated by coal from Australia and Indonesia.

In May 2011 Arch Coal announced that it was establishing a new subsidiary, Arch Coal Asia-Pacific Pte. Ltd., and named Renato Paladino president. A press release stated that Paladino will be responsible for Asia-Pacific regional business development, marketing and sales of thermal and metallurgical products, and regional supply chain expansion for the company. The new office will be located in Singapore.

Proposed Gateway Pacific Terminal
The Gateway Pacific Terminal is a proposed terminal at Cherry Point near Ferndale, Washington, and would have a maximum capacity of about 54 million tons. On February 28, 2011, SSA Marine applied for state and federal permits for the $500 million terminal, triggering formal environmental review. If approved, the terminal would begin construction in early 2013 and operations in 2015.

On March 1, 2011, Seattle-based SSA Marine announced it had entered into an agreement with St. Louis-based Peabody Energy to export up to 24 million metric tons of coal per year through the Gateway Pacific Terminal. According to Peabody, the terminal in Whatcom County would serve as the West Coast hub for exporting Peabody's coal from the Powder River Basin of Wyoming and Montana to Asian markets. The project would ramp up potential U.S. coal exports to Asia from Washington state. Another coal export terminal proposed in Longview, the Millennium Bulk Logistics Longview Terminal in southwest Washington, has drawn environmental opposition. That Millennium Bulk Logistics terminal would be a joint venture between Australia-based Ambre Energy and Arch Coal.

Environmental groups have appealed to Washington's Shoreline Hearings Board over a permit awarded for the port by Cowlitz County commissioners.

According to Gateway Pacific Terminal's website the company plans on providing a "highly efficient portal for American producers to export dry bulk commodities such as grain, potash and coal to Asian markets." Additionally, the site contends that the "Gateway project will generate about 4,000 jobs and about $54 million a year in tax revenue for state and local services. Once in full operation, it's estimated that Gateway will provide almost $10 million a year in tax revenue, create about 280 permanent family-wage jobs directly, and nearly 1,400 additional jobs through terminal purchases and employee spending."

During the week of June 6-10, 2011 SSA Marine filed a permit application the proposed Gateway Pacific Terminal. The application read:

"The applications submitted herein will cover the difference in scope between that approved project and our full buildout plan."

The earlier permit was noted in the application was approved by the Whatcom County Council in 1997. At that time, it envisioned a 180-acre development that would handle 8.2 million tons of cargoes per year, including petroleum coke (produced by local refineries) iron ore, sulfur, potash and wood chips. Coal was not mentioned an an export commodity in the earlier permit.

Later in June 2011, Whatcom County officials announced that SSA must apply for a new permit for its proposed Gateway Terminal.

Port of St. Helens potential candidate for coal export to Asia
In June 2011, The Oregonian reported that the Port of St. Helens in Columbia City, Oregon was being eyed as a potential Northwest port that would export coal to Asian countries. It was also reported that Columbia Riverkeeper, which opposes coal export, asked a judge to require St. Helens Port to release all of its coal-related documents. In a response, a lawyer for the port stated that doing so would violate a confidentiality agreement and "would result in the greatest harm to the public interest which can be imagined -- a loss of jobs in our community."

Oregon Democratic Gov. John Kitzhaber, wrote in a statement to The Oregonian that the terminal "should not happen in the dead of night. We must have an open, vigorous public debate before any projects move forward."

China's coal use
In 2009, China overtook the U.S. as the world’s biggest energy user (annually), according to the International Energy Agency. China burnt 1,537 million tons of coal in 2009, compared with 498 million in the U.S., BP Plc said in its annual Statistical Review of World Energy in June 2010. China also consumed 2,252 million metric tons of oil in 2009 in the form of crude, coal, natural gas, nuclear power, and renewable sources, exceeding the 2,170 million tons used by the U.S.

China surpassed the U.S. in carbon emissions in 2007, according to the U.S. Department of Energy. China released 6.533 million tons of carbon dioxide in 2008, compared with 5.832 million for the U.S.

According to head of the National Energy Administration’s general office Zhou Xi'an, the IEA’s data are “not very credible": “When the IEA came to China to publish its energy outlook a couple of days ago, they also over-estimated China’s energy consumption and carbon dioxide emissions. We think that’s because of a lack of knowledge about China, especially about China’s latest developments of energy conservation and renewable energy,” he said.

In 2010, China increased energy consumption by 5.9 percent, according to data from the National Bureau of Statistics. Energy use climbed to 3.25 billion metric tons of coal equivalent in 2010. Economic growth accelerated to 10.3 percent in 2010, the fastest pace in three years, as industrial production rose, boosting demand for fuel and electricity. Crude oil consumption expanded 12.9 percent in 2010 while power use gained 13.1 percent, according to the bureau.

In May 2011 it was reported that China's state-owned utility companies were defying government economic planners by deliberately holding back the amount of electricity they produced. The power companies said they would face financial ruin if the government continues to tightly limit the prices they can charge consumers, even as strong demand is sending coal prices to record highs. The chairwoman of one giant utility, China Power International, warmed that one-fifth of China’s 436 coal-fired power plants could face bankruptcy if the utilities cannot raise rates.

Coal Plants
Current estimates of the rate at which new coal plants are being built range widely. According to Greg Boyce, CEO of Peabody Energy, China is building 2 gigawatts (2,000 megawatts) of new power plants, mostly coal fired, per week. However, actual statistics gathered by the U.S. Energy Information Administration (EIA) indicate that the pace of building is significantly slower than that. According to the EIA, China's power capacity for all fuels grew from 1997 to 2005 as follows: Those figures imply a total growth in the eight years from 1997 to 2005 of 206,000 megawatts (206 GW) of capacity, or about 500 megawatts (MW) per week, about one-fourth the rate quoted by Peabody's Boyce.
 * 1997: 236.6 Gigawatts (GW)
 * 1998: 254.5 GW
 * 1999: 277.6 GW
 * 2000: 298.8 GW
 * 2001: 319.4 GW
 * 2002: 338.6 GW
 * 2003: 356.6 GW
 * 2004: 391.4 GW
 * 2005: 442.4 GW

One reason for difficulty obtaining accurate figures on Chinese coal plants is that in addition to government-sanctioned new coal plants, many illegal plants are built by local and provincial governments in an effort to maintain the energy supply necessary to sustain economic growth.

A difficulty in tracking Chinese coal data is that new plants frequently displace older ones. In 2007, the National Development and Reform Commission (NRDC) of China announced that the building of all new coal plants must be accompanied by the elimination of older, less efficient generators. For example, a new 300 MW power station will require the decommissioning of 240 MW of capacity of an older station. All coal plants with a capacity under 50 MW, and 100 MW generators older than 20 years, are to be closed by 2010. In February 2009, the Chinese government announced that by 2011 it will replace 31 GW of coal-fired power plants with newer, more energy-efficient models.

Coal-fired power stations financed by international public investment institutions
Coal-fired power stations financed by international public investment institutions include:
 * Baima power station, China
 * Dezhou power station, China
 * Green Energy power station, China
 * Huaneng Dalian power station, China
 * Huangen Fuzhou power station, China
 * Huaneng Nantong power station, China
 * Huaneng Dandong power station, China
 * Leiyang power station, China
 * Ligang power station, China
 * Meizhou Wan power station, China
 * Qinbei power station, China
 * Qitaihe power station, China
 * Shiheng-2 power station, China
 * Tianjin power station, China
 * Tuoketuo-1 power station, China
 * Waigaoqiao power station, China
 * Yangcheng power station, China
 * Yangzhou-2 power station, China
 * Yuzhou power station, China

Ningxia plant
The proposal for a coal-to-fuels plant in the northwestern Chinese province of Ningxia, a planned venture with South Africa’s Sasol, is awaiting approval from the National Development and Reform Commission, according to head of Shenhua Group’s science and technology development department Gu Dazhao in November 2010.

Sasol and Shenhua submitted an application to China's National Development and Reform Commission (NDRC) in 2009 to build the 94,000 barrel-a-day plant to convert coal into motor fuel. On March 7, 2011, it was announced that the companies received approval from the Chinese environmental ministry for the plant.

GE invests in China IGCC project
On January 18, 2011, GE announced that it would be forming a "clean coal" technology joint venture in China with the Shenhua Group, a state-owned coal mining and energy company. The joint venture company will sell industrial coal gasification technology licenses, conduct research and development and develop facilities around integrated gasification combined cycle (IGCC).

Peabody teams with China for two coal mines and plants
In January 2011, Peabody Energy announced two partnerships with Chinese energy companies to build coal mines near newly planned power plants in China. China Huaneng Group, the largest power generator in China, and California-based Calera Corp., agreed to develop a 1,200-megawatt power plant and adjacent coal mine in China's Inner Mongolia. Peabody would operate the surface mine. Huaneng and Calera plans to convert a percentage of the plant's carbon dioxide emissions into cement and other building materials. In the second project, Peabody said it will partner with Yankuang Group Co. to develop a 20-million-ton-per-year surface coal mine to fuel a 2,000-megawatt power plant in the Zhundong region of Xinjiang in northwestern China. The massive project also includes a facility to convert coal to natural gas. Peabody expects the Xinjiang region to nearly triple its coal production by 2015 to increase its output to 1 billion metric tons by 2020.

Coal Power Companies
China's power companies are primarily state-owned enterprises (SOE). In 2008, the ten largest power companies alone consumed 20% of China's total coal production. The top three power companies, Huaneng, Datong and Guodian, together in 2008 emitted more than the total greenhouse gas emissions of the United Kingdom in the same year. Although coal use is continuing to grow in China, in the last three years, the amount of inefficient coal-fired plants closed down in China reached 54.07 GW, more than the total installed electricity capacity of Australia.

A July 2009 Greenpeace China report lists the top ten power utilities as being :
 * China Huaneng Group, commonly referred to as Huaneng, with power stations with total installed capacity of 85.86 GW;
 * China Datang Corporation, commonly referred to as Datang, with power stations with total installed capacity of 82.42 GW;
 * China Guodian Corporation, commonly referred to as Guodian, with power stations with total installed capacity of 70.24 GW;
 * China Huadian Corporation, commonly referred to as Huadian, with power stations with total installed capacity of 69.08 GW;
 * China Power Investment Corporation (CPI), has power stations with total installed capacity of 45.71 GW;
 * China Three Gorges Project Corporation, commonly referred to as Three Gorges, with power stations with total installed capacity of 21.08 GW;
 * the Guangdong Yuedian Group, commonly referred to as Yuedian, with power stations with total installed capacity of 21.05 GW;
 * Zhejiang Provincial Energy Group, commonly referred to as Zhejiang Provincial Energy, with power stations with total installed capacity of 18.60 GW;
 * Shenhua Group Corporation, commonly referred to as Shenhua, with power stations with total installed capacity of 18.50 GW;
 * Resources Power Holdings Company (CRP), has power stations with total installed capacity of 17.40 GW;

Of these, the China Three Gorges Project Corporation, which built the controversial Three Gorges hydro project, is the only one of the top ten power companies which doesn't use coal.

Yanzhou coal buys 51% of Mongolian company
In September 2010, China's fourth-largest coal miner Yanzhou Coal said it will pay $682 million in an effort to acquire 51% of Inner Mongolia Haosheng Coal Mining. Yanzhou said it is looking to bolster reserves as Chinese coal consumption continues to surge. Yanzhou will pay $682.1 million to two sellers for a 35.5 percent stake in the developer of the Shilawusu coal field, and seek to buy a further 15.5 percent through an open bidding process, according to Bloomberg News. Yanzhou's last major acquisition was the $3 billion purchase of Australia's Felix Resources.

Coal officials found to be taking bribes
According to the China provincial government's supervision department, 906 government officials have been found to have received bribes or committed other crimes related to the coal mining sector, including a former vice-mayor and the former public security head of Datong city. Xing Shunxi, Deputy Director of the supervision department of the Shanxi government, said that in a campaign to crack down on corruption in the industry, launched in July 2008, 2,353 people so far have been punished in 2,185 cases. An amount of 30.4 billion Yuan (4.6 billion dollars) of illegal funds, a figure equal to one-third of the provincial government's revenue in 2009, has been retrieved. Shanxi possesses 260 billion tons of known coal deposits that are about one-third of the country's coal resources. Xing also said that the anti-corruption campaign is focused on detecting officials who have invested in the coal industry, a practice that is banned in China, and those taking bribes or illegally reselling State assets during property reconstruction.

Coal Waste
In September 2010, Greenpeace reported that China's huge number of coal-fired power plants generate so much toxic coal ash that the coal waste could fill an Olympic-sized swimming pool every two and a half minutes. According to the report, China consumed more than 3 billion tons of coal in 2009, more than triple what is used by the second-ranked United States, and generated 375 million tons of coal ash in its single-largest source of solid waste.

China depends on coal-fired power for 70 per cent of its energy, and Greenpeace found that China's methods for disposing of the ash are inadequate, with disposal sites often located near residential areas, allowing for contamination of surface water and deeper well water. China's coal ash production has grown by 2.5 times since 2002, when the country began a rapid expansion of coal-fired plants. Roughly one coal-fired power plant was being built each week in China, which currently has an estimated 1,400 such plants. China claims it recycles up to 60 per cent of the ash by mixing it to create construction materials such as bricks. However, the Greenpeace report said it doubted that the recycling rate was even half that. A team collected coal ash samples from 14 power stations nationwide and found more than 20 kinds of heavy metals and chemical compounds. Samples of groundwater and well water samples close to disposal sites showed chemical pollutants in excess of amounts the government deems safe for drinking water. Residents living near disposal areas have complained of health issues ranging from skin to respiratory illnesses, according to the report.

Clean Coal, Synfuels and Carbon Capture and Storage
The Chinese government has pushed the development of a large coal-to-liquids and carbon capture and storage (CCS) industry. According to a September 2010 speech by Du Minghua, Deputy Director of China Shenhua CTL (Coal-to-Liquids) & CTC (Coal-to-Chemicals) Research Institute, China so far has finished construction on 8 pilot "clean coal" conversion projects. Annual coal-to-liquid capacity stands at 1.68 million tons, coal-to-gas 15 billion cubic meters, and coal-to-olefin 1.7 million tons. China has also started construction of four pilot coal-to-gas projects in Inner Mongolia, Liaoning, and Xinjiang, due to become operational from 2011 to 2013, with output of 15.1 cubic meters per year. China National Offshore Oil Co. (CNOOC) intends to invest up to 100 billion yuan on a coal-to-gas project in Shanxi with annual output of 10 billion cubic meters in the coming five years, according to the company's general manager, Fu Yucheng. According to Wang, "China should better use coal-produced liquid fuel and chemical products to make up for the shortage of oil."

GreenGen
In December 2007, the Huaneng Group, a power producer based in Beijing, partnered with Peabody Energy to develop the GreenGen project, a coal-fueled power plant to employ partial carbon capture and storage (CCS).

In October 2008, three years after the opening of its Beijing office, Peabody Energy announced an estimated $2.5 billion project to pursue a large-scale coal mine and coal-to-liquids plant in Inner Mongolia. The plant, which would convert coal into methanol, would be developed by a group that includes Peabody, Inner Mongolia Jitong Railway Group Ltd., and the Chinese government. The mine would produce 10 to 20 million tons of coal per year. The project is a first for an American coal company in China.

First commercial scale Coal-to-Liquids plant
A Shenhua Group subsidiary is building the country's first commercial-scale coal-to-liquids (CTL) plant, scheduled to be operational in 2008, in the Inner Mongolia Autonomous Region. The plant in Erdos will burn coal to make, at the outset, a little over 1 million metric tons per year of diesel and other petrochemicals. In early June 2010, it was announced that the Shenhua Group would start operating the plant by the end of year. The U.S.$1.5 billion project is expected to capture 100,000 tons of carbon dioxide annually. The company stated that a facility capable of handling 3 million tons annually is being planned, but no timetable for construction has been set. The plant releases 3.6 million tons of carbon dioxide a year.

Coal gasification plant canceled
On September 10, 2008, Datang Huayin Electric Power Company, Ltd and GreatPoint Energy announced they would partner to build a pilot coal gasification plant in the Guangdong Province of China. Datang Huayin agreed to pay for design, construction, and initial operation costs, which was expected to be between one hundred million and two hundred million dollars. Coal or petroleum coke would have been used as feedstock, and the plant would have used 1,500 tons each day.

Datang Huayin is a subsidiary of China Datang Corp. and is one of the largest single polluters on Earth. In 2007, Datang Huayin generated 11.4 billion kilowatt-hours of electrical power. At the time of the agreement, the companies planned for follow-up projects, including a commercial facility in Inner Mongolia.

GreatPoint Energy is a coal gasification company based in Cambridge, Massachusetts. GreatPoint currently has two pilot gasification plants in the United States, and has also made deals with Peabody Energy and Dow Chemical Company.

Construction on the Datang's full-scale plant in Inner Mongolia - what would have been the first coal gasification plant in China - began in the last week of August 2009. Plant construction costs were estimated at $3.7 billion (£2.3 billion). The location for the plant was the city Chifeng of Inner Mongolia. The plant would have used gasification technology developed by GreatPoint Energy and required about 725 tons of coal each day. The synthetic gas was to be piped over 230 miles to Beijing. Datang was covering the majority of costs, with additional funds coming from Beijing Gas Group (a gas distributor) and New Horizon Capital (a private equity fund company in Hong Kong). Datang also planned to use the plant to make synthetic liquid oil.

On December 4, 2009, Datang announced the company decided to cancel its plans to build the demonstration facility "due to the low return rate after pre-feasibility studies."

Shenhua Coal-To-Liquids output may quadruple by 2015
It was announced in late November 2010 that Shenhua Group, China’s sole producer of liquid fuels from coal, may more than quadruple its output to 3 million metric tons annually by 2015 compared with 2010 to help meet demand from the country's growing economy.

China to increase syngas production
In a December 2010 report, China said it may meet a quarter of its natural gas demand by gasifying domestic coal. Such domestic coal gasification capacity may be about 50 billion cubic meters by 2015 based on plans by companies including China National Offshore Oil Corp. and the Shenhua Group. Gas consumption may reach 200 billion cubic meters by 2015, from 89 billion in 2009. China’s demand in 2015 may be met by 120 billion cubic meters from domestic conventional sources and the rest by imports and unconventional deposits. Datang International Power Generation is spending more than 50 billion yuan ($7.5 billion) on coal gasification in plants in Inner Mongolia and Liaoning.

Peabody and Chinese companies to pursue clean coal project
In January 2011 it was announced the U.S. based Peabody Coal, China Huaneng Group and Calera Corporation agreed to pursue the development of a clean coal project in the Xilinguole Region of Mongolia. The energy project would include a 1200 MW coal-fired power plant. The proposed plant would seek to capture a portion of carbon dioxide (CO2) and convert it into green building materials, advancing carbon capture technology. The plant would be fueled by a 12 million tonne per year surface mine operated by Peabody Coal.

It was stated that China Huaneng would serve as the power plant operator. Calera would use its technology to convert CO2 into solids that can be used as cement building materials. As of 2011, engineering plans were underway, with more announcements to come later in the year.

Health Impacts of China's Reliance on Coal
China’s citizens suffer significant health threats from coal related pollution. Approximately one-third of China’s urban population lives with severely polluted air. The three most polluted cities in China are in the Shanxi province, the country’s biggest producer of coal and provider of half of the world’s coke supply. In 2003, the Chinese Academy of Environmental Planning estimated that 300,000 people suffer premature death each year due to the effects of air pollution. In 2005 Chinese environmental experts projected that annual deaths caused by outdoor air pollution would reach 380,000 in 2010 and 550,000 in 2020. In 2007, the World Bank completed a study with SEPA, China's national environmental agency, which estimated annual premature deaths caused by air pollution at 350,000 to 400,000. After protests by the Chinese government, the study's results were not published.

Air Pollution
Carbon dioxide: In 2001 China’s carbon emissions from coal use constituted about 10% of world CO2 emissions, which totaled 23,899 million metric tons. The Kyoto Protocol has called for a decrease of 483 million tons of worldwide carbon emissions by 2012, but by then it is expected that coal plants in China will increase CO2 emissions by 1,926 million tons, or over four times the proposed reduction. China’s annual carbon emissions surpassed U.S. emissions in 2007, with three-fourths of these from coal; however, China's per-capita emissions were one-fifth of the U.S per-capita emissions.

Adding to emissions from coal-fueled plants, industry, and household use, coal mine fires burn about 200 million tons of coal each year in China. This results in an estimated additional 360 million metric tons, or 2-3% of total global output, of CO2 emissions annually. In the Xinjiang province of China, local miners using abandoned mines for shelter may intentionally set fires for heat, and elsewhere waste coal piles and natural coal seams are sometimes accidentally ignited by landscape clearing practices used in farming.

Mercury: China is currently the world’s largest emitter of mercury, largely as a byproduct of coal burning.

Sulfur dioxide and acid rain: Less than 15% of China's coal plants have desulphurization systems, or scrubbers; sulfur dioxide is a large contributor to acid rain. In 2008, approximately 22.5 million tons of sulfur were released in 2004, and over 30% of the country now experiences acid rainfall.

Increased cancer rates
In May 2011, it was reported that cancer was now the leading cause of death in China. Chinese Ministry of Health data implicated cancer in close to a quarter of all deaths countrywide, in both wealthy cities and rural areas. The Earth Policy Institute wrote that: "Reports from the countryside revealed a dangerous epidemic of “cancer villages” linked to pollution from some of the very industries propelling China’s explosive economy." More than 450 “cancer villages” have emerged across China in recent years, according to an analysis by geographer Lee Liu published in Environment magazine in 2010. These communities—where an unusually high number of residents are struck by the same types of cancer—tend to cluster in poorer areas along polluted waterways or downstream from industrial parks. Whereas much of China’s early industrial development took place along the coast, factories more recently have been locating where labor is cheaper and environmental oversight is less strict, pushing the so-called “cancer belt” inland.

Lung cancer was the most common cancer in China. Deaths from the typically fatal disease shot up nearly fivefold since the 1970s. In China’s rapidly growing cities, like Shanghai and Beijing, where particulates in the air are often four times higher than in New York City, nearly 30 percent of cancer deaths are from lung cancer. In rural areas, liver, lung, and stomach cancers each account for close to 20 percent of cancer mortality. Liver cancer is more than three times as likely to kill a Chinese farmer as the average global citizen; for stomach cancer, rural Chinese have double the world death rate. These cancers are linked to water polluted by chemicals and sewage, along with other environmental contaminants.

Government data indicate that half of China’s rivers and more than three out of every four lakes and reservoirs are too polluted for safe drinking, even after treatment. Nevertheless, they remain a primary source of water for many people. For villages once largely self-sufficient, the poisoning of their water and soil is often devastating.

The Earth Policy Institute went on to say that: "It is easy to point a finger at unscrupulous industries and government officials willing to look the other way, but some responsibility for China’s unhealthy environment originates outside the country’s borders. Waste is frequently loaded up in container ships overseas and delivered directly to China. More insidiously, Western consumers lapping up artificially cheap “made in China” components and products have outsourced pollution to this factory for the world."

Air Pollution
China’s coal-produced air pollution also reaches beyond its borders to Korea, Japan, and even the United States.

Economics
China’s demand for coal has driven global coal prices higher, and at the beginning of 2007 coal prices nearly doubled as China imported more coal than it exported for the first time.

Many carbon-intensive industries in the U.S. are moving to China because of the less stringent environmental codes, cheap labor, and vast coal resources.

Chinese coal projects outside China
Go to International Chinese coal projects

Coal Mining
There are an estimated 23,000 coal mines in China. China's coal mining industry has the world's worst safety record, with coal mines in China responsible for 80% of mining deaths worldwide. In 2005, 5,986 mine workers were killed in China, compared for example, to 47 in the United States. Since 2006, a year in which 4,746 mine workers were killed, the Chinese government has shut down thousands of small, often illegal mines in an effort to increase safety. The number of miners killed in 2007 dropped by one-fifth, however China still led the world in mining fatalities with 3,786 deaths. The coal mining industry in China is divided among large state-owned mines, local state-owned mines, and thousands of smaller town and village mines. In February 2006, the NDRC began restructuring the coal sector towards the goal of shutting down all small coal mines by 2015, and establishing five or six large state-owned conglomerates. According to one industry report, in 2005 only 2,000 of China’s 28,000 coal mines were state-owned. Many thousands of these mines rely on outdated equipment and are inefficiently managed, contributing to both increased pollution and dangerous working conditions. One-fifth of the mines are illegal, and it is estimated that the Chinese government has shut down between 20,000 and 50,000 small coal mines in the past several years. While the central government continues to crack down on illegal mines, the great demand for coal by China’s power plants, economic growth rates, and the remote locations of many of the mines challenge the government’s ability to control the construction of both illegal mines and plants.

In April 2009, the Ministry of Land and Resources announced that it would not issue any new coal mining licenses until 2011 due to lagging demand for electricity and coal. The decision extends a 2007 ruling aimed at cutting coal output. While the ban was scheduled to end in 2008, the economic slowdown has resulted in an excess of coal production capacity.

History
According to Dr. Syd S. Peng in Understanding the Chinese Coal Industry, coal production in the area was insignificant until the People’s Republic of China was established in 1949: "From 1949 to 1980, the national strategic mines were established to mine coal under a planned economy in which production, sales, and pricing were strictly controlled, and production fluctuation was kept to minimum. In the early 1980s, economic reform and a more open policy brought about vibrant economic activity in all walks of Chinese life and demands for energy increased sharply. Consequently from 1980 to 1997, in addition to an accelerated production increase in national strategic mines, township mines were developed to meet demand. As a result, there were a total of 64,000 mines in 1997 of which 61,000, or 95.3%, were small mines."

From 2000 to present, according to Peng, the coal industry has been re-organized and more centralized, with larger coal production groups formed and small and medium coal mines consolidated. Township mines in particular were consolidated with larger national strategic mines under government guidance. By 2010, China had about 15,000 mines of which 12,000 mines produce less than 300,000 mt annually. In 2008, there were 268 mines producing 836 million mt and accounting for one third of the total production. Among them, 25 extra-large companies produced more than 30 million mtpy. Another 14 conglomerates or groups of extra-large coal mines have been under construction.

Coal mine types
Coal mines in China are traditionally grouped into three types: national, provincial national, and township mines. National strategic mines are mines developed and operated directly by the central government under the original planned economy. In recent years, consolidated small mines have been included. There are a total of 268 national mines located in 22 provinces. In 2008, their production accounted for 50.7%. Provincial national mines are mines developed and operated directly by the 26 provincial governments in which the mines are located, and in recent years the consolidated small mines have been included. In 2008, their production accounted for 12.7%. Township mines are those developed after coal markets opened in 1980 and operated by the county and city governments in which the mines are located or by private citizens. They are located in 26 provinces and in 2008, their production accounted for 36.6%.

This type of classification of mines was only valid before the Ministry of Coal Industry was abolished in 1997. Thereafter, control and operation of all types of mines was transferred to the provinces. As of 2010, only two large groups of mines are controlled directly by the central government, Shenhua and China Coal, while many provincial national mines have been transferred to township and/or private contractors.

In 2008, underground mining accounted for 85.9% of total production, open-pit mining 6%, and other types 8.1%. There are more than 20 different underground coal mining methods in China, almost exclusively longwall mining.

U.S. L&L Energy buys DaPing coal mine
In March 2011, U.S.-based L & L Energy - which has coal mining and distribution businesses in China - announced that it has entered into a contract to acquire a majority controlling interest (60%) of the DaPing coal mine, located in PanXian, Guizhou Province in China. The mine currently produces approximately 150,000 metric tons per year (mtpy) of low-sulfur metallurgical coal and is expanding to 300,000 mtpy, which is expected to be completed in 2012. Under the agreement, L&L and the current owner of DaPing will form a U.S. joint venture company in China. L&L will contribute approximately $18 million in exchange for management control and 60% equity of the new joint venture company on a net equity basis. An additional $3 million in capital expenditures is planned to be injected by L&L.

Mongolia picks three coal field developers
On July 4, 2011 it was announced that United States based Peabody Energy, China’s Shenhua (神華能源) and a Russian-led consortium were selected to develop the Tavan Tolgoi coal deposit in Mongolia. Authorities in the country stated that they hoped its mining industry could help pull thousands of people out of poverty. The government announcement made no mention of Japan’s Mitsui and South Korea’s Korea Resources Co — originally on the shortlist of preferred bidders to develop Tavan Tolgoi. which is located in the South Gobi desert near China's northern border, is ranked as the world's largest undeveloped coal deposit.

Shenhua is to have a 40 percent share and Peabody 24 percent, while the remaining 36 percent is to be held by the Russian-led consortium. The draft agreement is subject to parliamentary approval and would be submitted to lawmakers. The selected companies will jointly develop the western part of the Tsenkhi block of Tavan Tolgoi, which contains mainly coking coal. State-owned Erdenes Tavan Tolgoi (ETT), set up to manage Mongolia’s coal mining interests, owns the rights to mine the block, and will do so with its foreign partners.

May 2011: Protests against coal mining operations break out in Inner Mongolia
In May, 2011 China's Inner Mongolia began an overhaul of its mining sector, China's state media Xinhua reported, in an effort to quell ethnic Mongol anger over charges of resource exploitation and environmental damage. At the time the northern Chinese region launched a push to bring order to the rapid exploitation of its rich coal deposits. This accelerated mining activity sparked a wave of Mongol protests against the coal mining activities.

The one-month campaign by China's Inner Mongolia mining sector was aimed at "ensuring the healthy, orderly, harmonious and green development of the coal industry" the region's coal mining bureau stated.

The vast region saw significant demonstrations over a period of a week, sparked by the May 10, 2011 killing of an ethnic Mongol protester who had tried to block a coal truck driven by a member of China's dominant Han ethnicity. The protester named Mergen was a Mongolian herder. He was with about 20 other protesters at the time of his death as he tried to stop the coal truck driving across pastureland. Mergen was run over and dragged nearly 150m (490ft) before he died, officials said.

Five days later, a forklift operator named Yan Wenlong was killed at a coal mine near Xilinhot after he and other locals clashed with company employees in a protest over pollution from the mine.

The incidents led to protests across the region, which separates the rest of China from the Republic of Mongolia to the north and has traditionally been home to nomadic Mongol herders.

It was reported that China moved swiftly to tighten security, including sealing off some restive college campuses, and residents in protest-hit areas have reported a tense calm had returned. However, hundreds of Mongols marched later in the regional capital of Hohhot on May 31, 2011, the US-based Southern Mongolian Human Rights Information Center stated.

Southern Mongolian Human Rights Information Center said a protest march also took place on May 30, 2011. AFP reported that the coal industry crackdown would include stepped-up checks on all existing and future projects and require all proposed mines to first submit environmental impact statements, the Inner Mongolia coal bureau's notice was quoted as saying.

June 2011: Death sentence for Chinese coal truck driver in protester's death
On June 3, 2011 Chinese official stated the government and local agencies are addressing pollution concerns that sparked clashes leading to a wave of ethnic protests across Inner Mongolia. Vice Environment Minister Li Ganjie said that local governments and environmental protection agencies will hold companies accountable that break laws and regulations.

On June 8, 2011 it was reported that a court in China sentenced a coalmine worker to death for killing a Mongolian herder named Mergen was killed while attempting to block a coal truck. The herder's death sparked protests across the northern Chinese region.

The co-driver of the coal truck was given a life term for his role in the killing of Mergen, which led to a series of protests in towns and cities across Inner Mongolia.

Mining accidents
Chinese coal mines are the deadliest in the world. According to official figures, at least 3,200 people died in China's mines in 2008. The actual number could be even higher, as the Chinese government is suspected of covering up some accidents. Most accidents are blamed on a failure to follow safety regulations, including adequate ventilation and available fire control equipment. In 2009, China had the most mining accident fatalities in the world, with a total of 2,631 coal miners dying in accidents, according to an official figure released by State Administration of Work Safety, which could be a conservative estimate. Mining deaths jumped again in the first half of 2010. Coal mine deaths through June 2010 were 1,261, up from 1,175 in the same period in 2009.

In 1997, the central government decided to abolish the ministries of several industries, including the Ministry of Coal, which oversaw coal worker safety. In 2005, the State Administration of Coal Mine Safety was established in its place, and is responsible for supervising coal mine safety at a national level. It is under the management of the State Administration of Work Safety (SAWS).

Citizen fighting coal mining sent to mental hospital
An investigative report released in December 2008 said that public security officials in the city of Xintai in Shandong Province had been institutionalizing residents who persisted in efforts to expose corruption or the unfair seizure of their property. In one case, a 57-year-old farmer seeking compensation for land ruined by a coal-mining operation, was seized by authorities in October on his way to petition the central government in Beijing. He was taken to the Xintai Mental Health Center in October. He was detained for 20 days, during which time he said he was lashed to a bed, forced to take pills, and given injections that made him dizzy and numb.

February 2009: Blast kills 77 in China's worst industrial accident in over a year
On February 22, 2009, a gas explosion at the Tunlan coal mine in northern China killed at least 77 miners and trapped dozens more. It was China's deadliest coal mine accident in more than a year. As of February 25, rescuers were still searching for one more miner, who faced slim chances of survival. More than 350 people survived the explosion, including 114 who were still hospitalized.

A preliminary investigation into the cause of the blast cited negligence. The state probe found that poor ventilation and gas management, and the absence of on-site security measures and supervision were to blame for the disaster. Three senior mine officials were fired, including the mine manager, chief safety officer, and chief engineer.

On February 25, 2009, the governor of the northern province of Shanxi wept as he apologized for the disaster. Governor Wang Jun replaced the province's former governor after an unlicensed tailings dam at an iron ore mine collapsed in September 2008, killing 277 people.

April 2009: Coal mine flood kills 7 in northeast China
On April 4, 2009, about 4,000 cubic meters of water poured into the shaft of a mine in Heilongjiang Province, where 22 miners were working underground. Six miners escaped, and another four were rescued and taken to a nearby hospital. As of April 6, the death toll stood at seven, and rescue efforts were still ongoing. Officials said the mine was licensed, but that had not been authorized by safety inspectors and thus was operating. Police said they had detained the owner of the mine, which is reported to have an estimated yearly output of 40,000 tonnes.

July 2009: Miners trapped for 25 days in flooded mine
Three miners were rescued on July 12, 2009 after spending 25 days trapped in a flooded mine in Guizhou province in southern China. Rescuers burrowed through a collapsed tunnel to reach the miners, who said they had survived by drinking dirty water and eating coal. The flood trapped 16 miners on June 17. Rescuers had previously recovered one body and were still looking for the remaining 12 miners.

November 2009: Mine explosion kills more than 100
On November 21, 2009, a massive gas explosion at a coal mine in northeastern China killed at least 42 miners, with 66 more miners trapped about a third of a mile underground. By November 23, the death toll was at 104. The blast occurred while 528 miners were working underground in a state-owned mine in Hegang, in the northeastern province of Heilongjiang. About 400 miners were able to escape.

March 2010: Shanxi Province Coal Mine Flood
On March 28, 2010, an estimated 261 miners (some Chinese media suspected more) working in a coal mine in northern China’s Shanxi Province were trapped when water leaked into and flooded the underground mine shaft. The authorities claimed that 108 miners had been lifted out, and that 153 were still trapped in the flood. On April 5, one hundred and fifteen more miners were rescued, nine days after being trapped in the flooded coal mine, with another 38 miners still trapped underground. Chinese media reported that some of the miners who were rescued used their belts to fasten their bodies to the rock wall, and crawled further into the mine after being submerged in water for three days and three nights. They ate pine tree bark from construction wood poles and drank cold water to stay alive.

Authorities were criticized for waiting until April 3, six days after miners were trapped, to make the first attempt to send rescuers into the pit to look for possible survivors.

June 2010: Henan mine blast kills 46 miners
On June 21, 2010 it was reported that a blast in the Henan province of China killed 46 coal miners. The mine, located in one of China's biggest coal producing regions, was allegedly operating illegally, according to the government-run Xinhua news agency. Though the cause of the blast is still not known, 72 miners were trapped after explosives blew up in the mine. Twenty-six escaped.

July 2010: Xiaonangou coal mine fire kills 28 workers
On July 18, 2010, an underground cable caught fire at Xiaonangou coal mine, in the Sangshuping Township of Hancheng City, northwest China's Shaanxi Province. All 28 workers in the mine died. Run by Xinxin Mining Co. Ltd., the mine was being extended. Annual output at the mine was expected to rise to 90,000 tonnes from 30,000 tonnes on completion of the extension. Police said they had detained the coal mine's owner, Guo Yungang.

August 2010: Multiple deaths from gas leak
On August 2, 2010, a gas leak at a coal mine killed nine people and left seven missing in central Henan province.

On August 3, a coal mine blast in southwestern China’s Guizhou province left 15 people dead and one missing, according to the government. On the same day, a collapse at a coal mine in Pu’er in the province of Yunan killed one person. (An accident at an iron ore mine in Benxi, in the northeastern Liaoning province, also left four people dead, according to the safety administration).

On August 5, sixteen miners were confirmed dead after a gas leak at the Sanyuandong coal mine in Dengfeng City, Henan Province, Xinhua.

On August 7, a gas leak mine in Shifang city in the southwestern province of Sichuan killed at least one worker and trapped five more, just hours after a fire in a gold mine killed 16. The report said the leak at the mine run by Hongda Red Star Mining Co., Ltd. It was the third gas leak at a China coal mine in a week.

In late August, 2010, China Coal Energy Co., the country's second largest coal producer, announced that it intended to double its coal output by the year 2015. The Beijing-based company produced 108.5 million metric tons of raw coal in 2009 and said it aimed to boost output by 15 million tons in 2010. The company also stated that it planned to produce 200 million tons annually by 2014.

October 2010: 37 dead after gas leak
As of October 18, 2010, a methane gas leak from a coal mine in Central China had caused 30 deaths. The gas leak occurred while more than 276 workers were underground. 239 escaped, but more were feared dead after more than 2,500 tons of coal dust smothered the pit after the gas leak, which has significantly hampered rescue efforts. Seven more miners were still underground, but hope for finding them alive is reportedly slim. Initial investigations into the leak have shown that a total of 173,500 cubic meters of gas had leaked out after the accident. The mine is also the site of a 2008 explosion which resulted in 23 workers losing their lives.

On October 19, it was confirmed that the seven other miners had not survived, bringing the death toll to 37. Xinhua news agency has reported that China has closed 1,355 small coal mines in 2010 as part of a larger initiative by the National Energy Administration to reorganize the mining industry in China, with the aim of increasing safety levels for workers as well as reducing greenhouse gas emissions from the industry, which are also some of the highest in the world.

October 2010: 12 die from flooding in illegally operated mine
On Oct. 27, 2010, flooding in a Chinese coal mine killed 12 miners in southwestern Guizhou Province. 50 miners were working in the shaft of the mine, the Xinhua news agency said, adding that 38 other miners managed to escape. The flooded Dapo Mine, which has an annual capacity of 90,000 tonnes, was operating illegally when the accident occurred. It had been ordered to suspend its operations on August 20, 2010, but it continued operations and had already caused one worker to die from electrocution on September 2, 2010, Xinhua said, citing a statement from the rescue centre.

November 2010: Flooding traps 28 underground
On November 21, 2010, a coal mine in southwestern China flooded, trapping 29 men underground, according to regional officials. Rescue workers were at the Batian coal mine in Sichuan province trying to pump water out of the mine. Regional safety chief Lin Shucheng said there had been 42 miners working when the flooding began, but 13 managed to escape. Lin said the mine had recently been redesigned to increase its annual output by 10,000 tons to 60,000, with the work approved and overseen by labor and safety authorities. The next day state papers said all 29 had been rescued.

December 2010: Explosion kills 26 miners
On December 7, 2010, an underground methane gas explosion killed at least 26 people at the Juyuan Coal Mine in Henan's Mianchi county in central China. Twenty miners escaped. Rescuers were still trying to determine the exact number of people working underground because the mine's operation was 'chaotic' and the manager apparently fled after the accident, according to Li Guoqi, chief engineer for the Yi Ma Coal Industry Group. Police investigations suggested that the missing manager, Suo Yonggang, might have hidden four bodies in the shaft, Li said. The mine had been closed for upgrading while the Yi Ma group was in the process of taking over management. Engineers should have eliminated unspecified 'safety hazards' before mining resumed but Suo had ordered the miners back to work, Li said. Rescuers had to pump out toxic gas before they could enter the mine, which had an annual production capacity of 150,000 tons.

July 2010: British Petroleum's future projects: coalbed methane in China
On July 14, 2010, China National Petroleum Corporation's PetroChina Co., the nation’s largest oil producer, announced it is working with BP to assess a “huge” coal- bed methane deposit in the northwestern province of Xinjiang, as companies intensify the search for unconventional energy. Tuha Oilfield Co., a unit of PetroChina, and BP’s technical experts have carried out initial studies of the geological conditions at the Shaerhu block and completed preparatory work. Coal-bed methane, gas in shale, and tight gas held between rocks are collectively known as unconventional gas resources. PetroChina plans to accelerate production of gas found on the surface of coal in the next decade to meet domestic demand, and annual output may exceed 10 billion cubic meters by 2020, compared with a projected 4 billion cubic meters by 2015. The work on the coal-seam gas deposit in the Tuha area is part of a “new stage of cooperation” between the companies on coal-bed methane: PetroChina said it would welcome cooperation with BP and has contacted the company to see if there was anything they could help with following the oil "spill" in the Gulf of Mexico.

October 2010: Chinese managers charged for shooting at coal miners in Zambia
On October 17, 2010, Zambian police said managers at a Chinese-run coal mine in Zambia who shot at workers protesting poor working conditions will be charged with attempted murder. Twelve workers at Collum Coal Mine in the southern town of Sinazongwe were injured on October 15 when mainly Chinese managers fired randomly at the protesting workers. Zambian Inspector General of police Francis Kabonde told journalists: "A warn and caution statement has already been recorded and what should be realised is that there is no one above the law, as it had been portrayed by some people." The incident has raised a political storm, with opposition leader Michael Sata of the Patriotic Front accusing the Chinese in the country of being untouchable because they are funding the ruling party ahead of next year's elections: "What do you expect the government to do with the Chinese? They are their friends and they constantly fund them." Investment from China has been on the rise Zambia, with several copper and coal mines bought by Chinese firms.

April 2011: 10 coal miners feared dead in China
It was reported on April 3, 2011 that ten underground coal miners were purported to be dead in the Aiwei'ergou provincial capital of Urumqi, in China's Innjiang Uygur Autonomous Region, when an outbreak of gas caused an accident. The mine was undergoing a large project to increase annual production to about a million tons of coal annually.

April 2011: Eight trapped miners found dead
On April, 27, 2011 Chinese news outlets reported that eight miners that were trapped for about two days in a flooded coal mine in China's southwest Guizhou Province were found dead. The eight were working underground in the Xiao'aozi coal mine in the province's Liupanshui city when they got trapped after water entered the mine. The other 37 miners working with them managed to escape, China's state-run Xinhua news agency reported.

July 2011: Three die in China coal mine rescue
It was reported on July 11, 2011 three rescuers died as they tried to help workers trapped in a coal mine in eastern China, 21 people remained stuck in another mine in the same region. China has been hit by a spate of serious mining accidents recently, highlighting the dangerous nature of the industry.

The three rescue workers were trying to reach miners trapped in a colliery in Shandong province's Zaozhuang city after a fire broke out underground a week prior, according to the local government statement.

British Petroleum's future projects: coalbed methane in China
On July 14, 2010, China National Petroleum Corporation's PetroChina Co., the nation’s largest oil producer, announced it is working with BP to assess a “huge” coal- bed methane deposit in the northwestern province of Xinjiang, as companies intensify the search for unconventional energy. Tuha Oilfield Co., a unit of PetroChina, and BP’s technical experts have carried out initial studies of the geological conditions at the Shaerhu block and completed preparatory work. Coal-bed methane, gas in shale, and tight gas held between rocks are collectively known as unconventional gas resources. PetroChina plans to accelerate production of gas found on the surface of coal in the next decade to meet domestic demand, and annual output may exceed 10 billion cubic meters by 2020, compared with a projected 4 billion cubic meters by 2015. The work on the coal-seam gas deposit in the Tuha area is part of a “new stage of cooperation” between the companies on coal-bed methane: PetroChina said it would welcome cooperation with BP and has contacted the company to see if there was anything they could help with following the oil "spill" in the Gulf of Mexico.

Transportation of Coal
Most coal in China is mined in the less populated western and northeastern regions. The population is concentrated in the southeastern coastal areas. Coal transportation relies on railroads, trucks, inland waterways and offshore shipping. In 2008, railroads handled roughly 60% of the total production, inland waterways and offshore shipping 30%, and trucking 10%. Despite the recent completion of many railroads, coal transportation to the consuming areas, especially to the southeastern coastal areas, remains very tight.

Shen Neng 1 coal carrier collision with the Great Barrier Reef, Australia
On April 3, 2010, Chinese-owned bulk coal carrier named Shen Neng 1 rammed into the Great Barrier Reef in Australia, the planet's largest coral reef and selected as a World Heritage Site in 1981. The reef is more than 1,200 miles long and comprises more than 3,000 individual reefs, cays, and islands, providing a habitat for countless sea species. The 700 foot vessel was hauling more than 65,000 tons of coal, and hit the reef at full speed in a restricted zone of the marine park, rupturing the vessel's fuel tanks and prompting Australian officials to activate a national oil spill response plan. Besides physical damage to the reef, the greatest threat to the reef was signs of leakage of the roughly 300,000 gallons of heavy low-grade fuel oil the vessel carries to run its engine. The fuel oil is a byproduct of oil production that is used by many cargo ships because it is cheap, but also full of contaminants and very gooey, making it dangerous for animals and hard to clean up. A light aircraft was seen spraying a chemical dispersant on the spilled oil.

The Australian Transport Safety Bureau said it would be conducting a full investigation of the incident. The Chinese freighter was in a no-shipping zone, and the owners of the ship could face a fine of $1 million if found to have violated Australia's shipping laws. It is possible that the Captain was attempting to make his voyage shorter by taking a short cut through the reef. Critics say commercial ships are supposed to be monitored by Australian authorities, but the monitoring is weak. The Australian group World Wide Fund for Nature (Australia) claims the Chinese company that owns the ship, Shenzhen Energy, a subsidiary of the COSCO Group, has had three similar incidents occur during the past four years.

Mitigation Efforts
The welfare cost of air pollution has been estimated to be between 3 and 8% of China’s GDP. Other studies put the overall environmental impact of China’s pollution problems between 5 and 15% of its GDP, almost exactly matching the figure of the country’s growth. A study released by Greenpeace in September 2008 found that the external costs to China of using coal - including air and water pollution, ecosystem degradation, infrastructure damage, and human injuries and death - reached RMB 7.1 trillion in 2007, or about 7 percent of China's 2007 GDP. Each tonne of coal used in China, on average, caused environmental damages of RMB 150.

Although the Chinese government has prioritized economic growth and tackling poverty ahead of environmental concerns for some time, there is growing acknowledgement of China’s coal related pollution crises. In addition to shutting down illegal plants, the government has banned the use of coal for heating and cooking in major cities such as Beijing and Shanghai, and is replacing coal-fired plants in urban areas with natural gas plants. By 2010, all new coal-plants must be fitted with devices that remove up to 95% of sulfur. The government has also announced plans to cut its reliance on coal to 62% of its energy needs by 2030 and to 35% by 2050, in favor of natural gas, nuclear, hydro, solar and wind power. In the meantime, new legal coal plants continue to be built, and for China to improve its emissions of global-warming gases and other pollutants, it must rely on new, more costly equipment and technology imported from other industrialized nations. A 2007 study found that increased energy efficiency in China could reduce the amount of energy consumed in the country by 40 percent, and that renewable energy could provide over 50 percent of China's energy needs.

July 2009: Beijing closes coal plants
In July 2009, Beijing officials announced they were accelerating a plan to shut down smaller, less efficient coal-fired power plants. Because of a drop in demand for electricity, authorities were able to close coal plants totaling 7,467 generating units 18 months ahead of schedule. The closures are part of an effort to to improve energy efficiency and reduce demand for imported oil and gas. The closures are estimated to reduce sulfur dioxide emissions by 1.1 million tons and carbon dioxide emissions by 124 million tons each year.

July 2010: Chinese Government Considers Cap on Coal Production
In late 2009, a plan announced by President Hu Jintao called for China to reduce its carbon emissions per unit of economic output by 40 to 45 percent by 2020, compared with 2005 levels. Even if China meets its energy-efficiency goal in 2010, however, and its carbon goal by 2020, the International Energy Agency forecasts the country's total carbon emissions are still on track to rise steeply in the next decade, due to factors including rapid growth in the Chinese economy, growing car ownership and rising ownership of household appliances.

In late July 2010 the Chinese government announced they were considering whether or not to impose a cap on coal production in the country that would go into effect by 2015: “There must be a ceiling on coal output in the future, and energy needs can be met with new and renewable energy,” Wu Yin, a deputy director at the National Energy Administration, told the official China Energy News weekly newspaper in an interview. Wu didn’t specify any production targets.

China is world’s biggest producer and consumer of coal and wants 15 percent of its energy mix to come from non-fossil fuel sources by 2020, stated government officials. The Chinese government believes this will help them meet emissions targets by 2015. Currently coal makes up 70 percent of the country’s energy needs, but they want that number to drop to 65 percent by 2020.

But surging production by heavy industry since winter 2009 has put in question China’s ability to meet the target. China’s energy consumption rose so sharply in winter that it produced the biggest surge ever of greenhouse gases by a single country. Power plants burned more coal to generate enough electricity to meet demand. According to the New York Times, as China has become increasingly dependent on imported oil and coal, its national security establishment has become more visibly involved in energy policy and energy security, including efforts to improve energy efficiency. Efficiency improved 14.4 percent in the first four years of the current plan, only to deteriorate by 3.6 percent in the first quarter of 2010, according to official statistics. Energy analysts said those statistics indicated improvement in efficiency in the second quarter that nearly offset the deterioration in the first quarter, although the government has not released separate figures for the second quarter.

August 2010: China closes over 2,000 factories to lower energy usage
In August 2010, the Ministry of Industry and Information Technology quietly published a list of 2,087 steel mills, cement works and other energy-intensive factories required to close by Sept. 30, 2010 as part of China's energy reduction plan. The current Chinese five-year plan calls for using 20 percent less energy in 2010 for each unit of economic output than in 2005. The ministry said in its statement that the factories to be closed would include 762 that make cement, 279 that produce paper, 175 that manufacture steel and 84 that process leather. The factories were chosen after discussions with provincial and municipal officials to identify industrial operations with outdated, inefficient technology, the ministry said. The list of steel mills to be closed appeared to emphasize smaller, older mills producing fairly low-end grades of steel. Edward Meng, the chief financial officer of China Gerui Advanced Materials, a steel-processing company in central China’s Henan Province, said that the closing of such mills was consistent with the government’s broader goals of consolidating the steel sector and pushing steel makers into the production of more sophisticated kinds of steel.

To prevent local obstruction, the ministry said in a statement on its Web site that the factories on its list would be barred from obtaining bank loans, export credits, business licenses and land. The ministry even warned that their electricity would be shut off, if necessary. The announcement was the latest in a series of Chinese moves to increase energy efficiency. The National Development and Reform Commission, the government’s most powerful economic planning agency, announced on August 6 that it had forced 22 provinces to halt their practice of providing electricity at discounted prices to energy-hungry industries like aluminum production. Energy analysts described the plant closings as a significant step toward the country’s energy-efficiency goals, but not enough by itself to achieve them.

China to close old, small coal plants
As part of the Chinese government's five-year plan to address air pollution, "Notice of the General Office of the State Council about Forwarding Guiding Opinions on Pushing Forward the Joint Prevention and Control of Atmospheric Pollution to Improve the Regional Air Quality Developed by the Ministry of Environment Protection and Relevant Departments," the country is looking to: "Eliminate conventional thermal power generating units which have been operated for 20 years and whose capacity of each unit is less than 100 MW, various generating units whose service is up and whose capacity of each unit is less than 200 MW, and various coal burning units whose power supply standard coal consumption is 10 percent higher than average level of the province (autonomous region and municipality) in 2010 or 15 percent higher than national average level."

The plan is a continuation of policy established in the previous five-year plan, which mandated the shutdown of old coal plants under 50 MW. In the past five years, China has shut down over 50 GW of older and smaller coal plants. Xue Jing, director of statistics and information at the China Electricity Council (CEC), said at an earlier conference that China will invest more in the power grid and clean energy, and gradually decrease the proportion of power plants that are coal-fired. Statistics from the CEC report show that in 2008, China’s investment in nuclear power and wind power increased 72 percent and 88 percent year on year, respectively. At the same time, investment in coal-fired plants declined 22 percent.

Related SourceWatch Articles

 * China Coal Association
 * Clean Energy Research Center
 * Ten Year Framework on Energy and Environment Cooperation
 * U.S.-China Shale Gas Resource Initiative
 * U.S.-China Energy Efficiency Action Plan
 * U.S.-China Electric Vehicles Initiative
 * The U.S.-China Renewable Energy Partnership
 * The U.S.-China Energy Cooperation Program
 * U.S.-China Energy Policy Dialogue
 * U.S.-China Shale Gas Resource Initiative
 * Coal Exports from Northwest United States Ports
 * Coal-to-Liquids in China
 * Global use and production of coal
 * Australia and coal
 * Britain and coal
 * Europe and coal
 * Germany and coal
 * Mongolia and coal
 * GreenGen
 * Indonesia and coal
 * Japan and coal
 * New Zealand and coal
 * Shenhua Group
 * South Africa and coal
 * United States and coal

Sources of Data on Coal Mining and Energy Sources in China

 * U.S. Geological Survey, country profiles 1994 - 2006
 * U.S. Geological Survey, China’s Growing Appetite for Minerals report 2004
 * International Energy Agency, "Coal in China, People's Republic of in 2005", International Energy Agency website, accessed June 2008.
 * Joseph Romm, "China's immoral energy policy: Part I," Gristmill, 11/1/07
 * "U.S -China Fact Sheet on Coal", The White House, November 2009.

Reports

 * Mao Yushi, Sheng Hong and Yang Fuqiang, "The True Cost of Coal", Greenpeace, The Energy Foundation and WWF, October 2008.
 * Greenpeace, "Polluting Power: Ranking China's Power Companies", July 2009.
 * JianJun Tu, "Industrial Organization of the Chinese Coal Industry", Program on Energy and Sustainable Development at Stanford University, June 2010. (Note this is a draft report released for feedback - cite carefully).

Articles on Chinese media coverage of coal

 * "Dai Xiaojun: I Wanted to Show People the Dark Side," China Digital Times
 * "Charges due in China mine killing," BBC News< March 20, 2007

General Articles

 * Zhao Xiaohui & Jiang Xueli, “Coal Mining: Most Deadly Job in China”, Xinhua, November 13, 2004.
 * Susan Watts, “A Coal-Dependent Future?”, BBC News, March 9, 2005.
 * Mines and Communities, "China Theme", Mines and Communities website, accessed June 2008. (This page provides a set of links to various articles related to China and mining issues).
 * Tom Miles, "McKinsey Maps Out China's Options For Going Green", Reuters, February 26, 2009.
 * Syd S. Peng, "Understanding the Chinese Coal Industry," Coal Age, August 26, 2010
 * JianJun Tu, "Industrial Organization of the Chinese Coal Industry," Program on Energy and Sustainable Development at Stanford University, Working Paper NO.: TBD, June 2010 (draft)